Google facing Texas-sized class action lawsuit over AdWords

A lawsuit seeks class action status for anyone in Texas that had someone else …

When does the use of a trademark in third-party advertising constitute infringement? To an extent, it depends on where you are. In the US, eBay is in the clear, while the same behavior has caused it trouble in France. Google is facing similar suits in a variety of countries over the use of trademarked names in its Adwords service, and its attempts to quash one of these cases before the trial was turned down on appeal last month. Apparently, that legal setback has been taken as a sign that it's open season on adwords, as a new class-action suit targets Google and anyone who has embedded its search ads on behalf of the entire state of Texas.

Well, maybe not the entire state, but it's potentially a very large class. Although the lead plaintiff, a company that does business under the name of Firepond, appears to be a small outfit located in East Texas, it's hoping that any individual or company based in the state will join in, provided they meet two conditions: they have a registered trademark and Google has sold that trademark to a competitor as part of the Adwords system at some point in the last four years. The primary limit there may be providing evidence that the trademarked name was used for advertising.

Firepond's attorneys aren't limiting themselves to Google, either, as a number of other big names, such as Turner Broadcasting, Myspace, and Ask.com all are targeted. Each of these companies relies on Google to provide a search service with embedded ads on their site, and so are involved in aiding and abetting the alleged trademark infringement, according to the suit. Firepond helpfully embeds a series of screen captures for most of these sites, showing a competitor's ad as a sponsored link; an equivalent ad campaign doesn't appear to be happening currently.

The key legal question will be whether Google's presentation of links to a competitor's product will be sufficient to cause confusion among Web-surfing consumers. Firepond's attorneys claim that such confusion abounds, as some of the sponsored links are often to the company associated with the trademark, the suit argues, "Internet users are conditioned to expect the Sponsored Links to include Trademark Holders and authorized users of such Trademarks." Elsewhere, the suit implies that the company is willing to provide evidence that this sort of consumer-level confusion has happened, and Firepond may provide testimony to that effect. "Upon information and belief," it reads, "defendants' use of the Firepond Marks and Class Marks causes at least some consumers actively seeking to find and do business with Firepond and Class Members to be diverted to one or more Sponsored Links linking to the webpages of Firepond’s and Class Members' competitors."

A court seems likely to have to sort out whether any confusion of this sort meets the relevant legal standards, or decide that these confused individuals are out where the bell curve of Internet behavior goes flat. Or, more accurately, a jury will, as that's what Firepond is asking for. Firepond should have less trouble demonstrating that Google is taking these actions deliberately, as they've found a financial prospectus from Google in which the search engine company acknowledges that it implemented its Adwords policy knowing that it will likely expose them to lawsuits of precisely this nature.

The court, however, will have to decide whether to allow the class action. There are reasonable arguments that it shouldn't; the degree of consumer confusion will undoubtedly vary based on how generic-sounding a trademark is, the number of ads, etc. But Firepond's suit argues that it's the policy that causes the problems, and that transcends the vagaries of individual cases. "There are questions of law and fact common to the Class," the attorneys state, "which predominate over any questions affecting only individual Class Members." And, since that policy is implemented in software, it's possible for further infringements to occur at any time.

Even if it does wind up avoiding a class action, Google is unlikely to want to continue to expose itself to risks of further lawsuits if Firepond prevails. Firepond is asking for damages, punitive damages, profits from the infringing ads, attorneys fees, corrective advertising, etc.

Given that this case cites violations of Texas law, and is limited to plaintiffs in the state, it's a fair bet that we'll be seeing further lawsuits of the sort in future months. Google's recent loss on appeal suggests that the legal question is still open, and it appears that lawyers are smelling the money and moving in.

Internet users are conditioned to expect the Sponsored Links to include Trademark Holders and authorized users of such Trademarks.

That's where they lose me. As far as I can tell, internet users are conditioned to expect Sponsored Links to include nothing more or less than any other advertising, which is to say generally untrustworthy claims someone has paid to have shoved intrusively in front of your face because they want to take money out of your pocket regardless of whether they produce a good or service you actually need or want.

I don't think I understand the problem. I google search firepond, all I get is stuff about firepond. I dont see any ads about competitors. Although I do see that a former exec at firepond was arrested on fraud charges.....

I think all of the goodwill that Google has gathered is slowly starting to spend itself out. They are continually pushing the boundaries, e.g. book search (copyright), adwords (copyright), and Maps (privacy) and I don't think very many people are comfortable with that agenda being pushed forward by a private corporation, however much they promise not to be evil.

This is precisely the kind of thing that makes Google a voice for the people. It is helping to define the rights of everyone at their own expense. I don't think that they're getting it right. What I don't like is that the courts allow stuff like this in tort cases when there is nothing really to refer to in case history since this is all pioneer territory. In other words, I think the cases should be going to court or before a senatorial/congressional system where the rules would be clearly defined with interested parties being able to have a voice before some tentative rules should be laid out and tested.

I don't agree with everything that Google does, but on the whole I think they've been a tremendous force for good. Ten years ago they started the fight against M$, and they've taken a lot of territory for doing good all over the Internet on behalf of everyone. We've got Google Docs, the beginnings of what might be a revolutionary literary service or library that anyone can access anywhere (for which I'd be happy to pay $100 or so per year if it's at least as good as my old university's library). I do think there needs to perhaps be an opt out moratorium service for certain things. On the other hand, why should a given company be given the entire monopoly on their brand name? That would be tantamount to censorship - ie., The fraud case in Firepond doesn't get listed because the company doesn't approve of it. What if a given government decides it doesn't like having negative issues listed. ie, for being unChinese or unAmerican? And why wouldn't someone be able to pay for a listing with Google should a site wish to list itself as a competitor?

Originally posted by Ralf The Dog:Am I wrong or is Texas the only state in the US that allows capitol punishment in civil lawsuits?

Don't know about that, but they execute women and retards (whatever that may be worth). Women I get, retards I don't. The mentally retarded have a real disability while women are just men sans cocks (and in many cases a whole lot meaner).

Usually a trademark holder is entitled to prevent competitors from using the registered trademark for commercial purpose. One exception is comparative advertising, but event that took some time to clarify and is subject to limitations.

To "buy" a search for a competing trademark *does* seem to be a commercial use of that trademark. Unless the term is so generic that it probably lost its trademark status (velcro, aspirin, ...) when someone searches for a specific trademark it expects to find it in the search results, not a competitor. This practice diverts consumers from their intended search.

While I'm somewhat sympathetic to this for the broader alternatives it offers (you might find that you like a competitor's product better), I also think that trademark holders have a point in rejecting this model. GM may pay for "car" searches to direct to their site, but when they pay for "Prius" they are using a third party's trademark, with a commercial purpose, and possibly inducing confusion in consumers.

I strongly suspect that in Portugal (if any of this reached the courts, but sadly there are precious few interesting court cases here) AdWords users of third party trademarks would get a slap on the wrist. Maybe US courts will build some kind of "fair use" doctrine?

OK, it's always been obvious that AdWords crossed the line in several places, but it is also obvious that Firepond is nothing more than a bunch of ambulance chasers hoping to create the next super suit against Corporate America.

Personally, I hope they fail simply because their motives are even worse than Google's.

This seems like a stretch to me, although not being a lawyer, I guess I don't know that much about it.

Trademarks used to be about protecting customers from counterfeit products. It wasn't supposed to protect manufacturers from anything.

Let's say that Duracell makes good batteries. Customers know that, and so lots of people will go out of their way to buy Duracells. They'll pay more. The point of Trademark law was to prevent some other company from lying to customers and say, "This is a Duracell battery!" when it isn't. But that's for the Customer's benefit -- not for the benefit of the Duracell people.

Somehow trademark law has morphed into something that's protects companies from honest discussions of their shoddy products, or of other companies running ads that say that some other product is better.

The idea that people are too stupid to know that the ads generated by ad words aren't connected to the ad words -- even though the ad word that triggers the ad placement isn't even displayed -- is preposterous.

If I google a Dell laptop, and an ad pops up that says, "Hey! Why don't you take a look at Lenovo!" it's completely legitimate. That's the way the market is *supposed* to work. It's totally in my interest as a customer to have that happen.

Corporate America is funny. If they're showing us a credit card agreement, then they'll assume we're just as good at reading contracts as a supreme court justice with really amazing eyesight. If we're talking about rules that might impact our ability to discuss their products, or find competitors, then we're the dunmbest people who ever lived, and we have to protected from our own ignorance.

Trademark exists so that consumers can identify companies by name, and that companies can have exclusive use of the name to identify themselves to consumers.

There's nothing wrong with using it the way AdWords is, unless the competitor's name is deceptively similar. Noone clicks on a link saying "Energiser Batteries" thinking its Duracell, even if they searched for "duracell."

All it does is put more alternatives infront of the consumer, which, apart from taking up monitor space, is a good thing as it fosters competition.

It shouldn't be illegal to put up competitor ads. If I search for "Ford Trucks", why should "Chevy Trucks" not be able to make a competing offer? As a consumer, I want to see choices. I want to see that "Tylenol" isn't anything special, it's just an unbelievably expensive brand of acetaminophen, and that "Parent's Choice" has all the same properties. I hope this dies on free speech grounds and everything else, including consumer outrage.

Originally posted by Ralf The Dog:Am I wrong or is Texas the only state in the US that allows capitol punishment in civil lawsuits?

Don't know about that, but they execute women and retards (whatever that may be worth). Women I get, retards I don't. The mentally retarded have a real disability while women are just men sans cocks (and in many cases a whole lot meaner).

OK. Admittedly off-topic, but this is just the sort of nonsensical, crude, and fact-free statement I expect from 95%+ of Ars posts nowadays. But now I have the urge to tamp it down a bit.

So, Nagumo, do you suggest that a simple lack of intelligence should exempt one from the same standards of justice (whether one agrees with those standards or not) that apply to everyone else? People that have lost limbs have "real disabilities" also, do they not? Should then they also be exempt from those same standards of justice? Are you not aware that "Atkins vs. Virginia" forbids the imposition of the death penalty for so called "mentally retarded" people. Did you know that Texas is part of the United States and that SCOTUS rulings therefore apply to Texas also?

It seems to me that the standard should be the same as for those people deemed insane. That is, did they know that their crimes were wrong and can they adequately cooperate in their own defense? This is one (and only one) reason why the SCOTUS majority ruling "Atkins vs. Virginia" is such a perversion of justice--a classic case of judicial activism, where judges feel compelled not to interpret the law, but make law by substituting their own sensibilities for the will of the people. Seldom do we see such a clear demonstration of why the justices in majority of this case are clearly unfit for their positions, as their modus operandi is destructive to the very foundation of justice and to the republic.